Loss ratio is how profitable they are on a per policy basis by just looking at claims/LAE. Combined ratio takes into account all other costs for operating profitability such as admin and marketing.
Bc of their operating leverage using FCF is a hard estimate to utilize (which I tried to accommodate with a large multiple) and because of their rapid growth so the book multiple. EV/Sales is probably the best but they’re all estimates due to the age, inflection, and growth of the company.
Edwin Dorsey / Bear Cave is openly critical of Root / Root's tech...thoughts? 16:54 - https://www.youtube.com/watch?v=MozIUdLkRq4&t=6106s
He is discussing root insurance from 2020 not root insurance from 2024. They are in a completely different position now.
The bundling is indeed a good lever to strengthen retention.
First you write loss ratio is the best indicatilor of underwriting profitability, which you later corrected for combined ratio.
How do you calculate FCF for an insurance? And does FCF make any sense for an insurer?
Loss ratio is how profitable they are on a per policy basis by just looking at claims/LAE. Combined ratio takes into account all other costs for operating profitability such as admin and marketing.
Bc of their operating leverage using FCF is a hard estimate to utilize (which I tried to accommodate with a large multiple) and because of their rapid growth so the book multiple. EV/Sales is probably the best but they’re all estimates due to the age, inflection, and growth of the company.